B&G Foods (BGS) 6 Aug 24 2024 Q2 Earnings call transcript
B&G Foods, Inc. recently held its second quarter 2024 earnings call, providing a comprehensive update on the company's financial performance and strategic initiatives. The call, led by Senior Associate AJ Schwab, CEO Kenneth Keller, and CFO Bruce Wacha, highlighted the company's focus on strategic portfolio shaping, improving base business trends, and managing inflationary pressures.
Strategic Portfolio Shaping and Improving Business Trends
The call began with a reminder of the company's focus on strategic portfolio shaping, which includes reshaping the portfolio for future growth, stability, and higher margins. B&G Foods has recently divested several brands, including the Green Giant U.S. canned vegetable business and is conducting a strategic review of its frozen and remaining canned vegetables business for possible divestiture. This strategic focus on portfolio shaping is expected to enhance the company's capabilities and enable it to capitalize on growth opportunities.
Financial Performance Highlights
The company reported second quarter net sales of $444.6 million and adjusted EBITDA of $64 million, which were in line with expectations. However, base business net sales decreased by approximately 1.5% compared to the year ago period, reflecting softer trends in the center of the store and foodservice sales declines. The Spices & Flavor Solutions business unit, B&G Foods' highest segment adjusted EBITDA as a percentage of net sales, showed a 4.9% increase in net sales and a 5.9% increase in segment adjusted EBITDA.
Managing Inflation and Input Costs
The call also addressed the impact of inflation on the company's financial performance, with Bruce Wacha noting that while input cost inflation remains a challenge, the company has been able to mitigate these costs through favorability in certain areas such as soybean oil, cans, and logistics. Selling, general, and administrative expenses decreased by $4.8 million or 9.9% in the second quarter, reflecting cost savings initiatives and favorability in some areas.
Looking Ahead
In the outlook for the remainder of fiscal 2024, B&G Foods expects to continue its focus on strategic portfolio shaping, improving base business trends, and managing input costs. The company is revising its fiscal 2024 guidance to reflect industry-wide challenges in consumer activity and volume improvement throughout the year. Bruce Wacha highlighted the company's goal of reducing leverage below 5.5x through divestitures and excess cash flow to facilitate strategic acquisitions.
Analysts' Questions and Management's Response
During the question-and-answer session, analysts raised questions on various topics, including inventory levels, promotional environment, competitive landscape, and strategic review of the frozen business. Management responded with details on inventory reduction efforts, promotion intensity, competitive dynamics, and the strategic review process for the frozen business.
Conclusion
The B&G Foods second quarter earnings call provided insights into the company's financial performance, strategic initiatives, and future outlook. With a focus on strategic portfolio shaping, improving business trends, and managing inflationary pressures, B&G Foods is well-positioned to navigate the current market dynamics and capitalize on growth opportunities.